The property market is increasingly competitive, so these 5 tips for a bond application can help to ensure that you are not left behind in the loan loop. It is important to be well-prepared so that when you find the property you want you can act quickly to get the money you need to nab it.
What is a bond?
A bond is a kind of debt security, where you agree to pay back the money you borrowed with interest. Essentially, a bond is a kind of home loan. Bonds are usually issued out by credit institutions such as banks and other lenders if the potential customer meets the eligibility requirements.
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1. Count up the costs
Buying a home is expensive, and not only for the actual bricks and mortar. There are a number of costs involved in purchasing a home, so it is important to come prepared to avoid unnecessary upset and a delay in your application process. Some charged to be aware of are; transfer duty, legal costs, bank charges, and a bond registration fee.
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2. Clean up your credit
Most lending institutions will require you to have a good credit history before you apply to loan money from them. Particularly with the National Credit Act in place, it is important to check up on your credit slate to see that it is clean. If you don’t have a good history, there is a good chance you will be denied your loan application and will see your dream house signed off to another buyer.
If you have a poor credit history, you can rebuild it by making loan payments regularly and on time and becoming a responsible credit holder. This process may take some time, however, so if you do have a poor credit record you will usually need to wait a while and work on your credit rating before you become a bond-holder.
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3. Dish out the documents
There are a number of documents that your bank or other lender will need before you can apply for a bond. Be sure that you meet the eligibility requirements and have your documents ready by doing research into what your lender will require.
Although all institutions many have slightly different criteria, some of the documents required by most bond originators include:
For self-employed applicants:
- A copy of your identification document
- A utility bill showing at least 3 months of payments
- An acknowledgement by SARS of your statements on monies owed and tax return, known as an IT 34 document.
- A statement of you earnings and gross profit for the past year or further in the form of a letter from your accountant.
- A personal bank statement of the last 3 months
- Your businesses’ bank statement from the last 3 months.
For applicants employed by a company:
- A copy of your identification document
- A utility bill showing at least 3 months of payments
- A personal bank statement of the last 3 months
- Your tax number
- A letter of employment from your company
- Your most recent payslip
By preparing these documents before going to your bond originator you can save yourself a lot of time and may even be able to start your application on your first appointment. It is best to find out first from your particular institution the exact paperwork they will need so that you can get started right away.
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4. Get your shopaholic on
Don’t just settle for the first lender that comes your way. As with most financial decisions, you should first shop around and investigate a variety of options to make sure that you are getting the best deal for your unique circumstances. If you are declined by the first lender you approach, don’t despair as you may still have a good shot with another institution.
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5. The best of the bond originators
Use a reputable bond originator as they will be able to assist you to negotiate with major lenders on your behalf. They will also be able to give you feedback on the progress of your application.